Top management team (TMT) tenure diversity and firm performance: examining the moderating effect of TMT average age. Issue 3 (11th July 2016)

• Record Type: Journal Article
• Authors: Tanikawa, Tomohiko; Jung, Yuhee
• Editors: Stokes, Peter; Smith, Simon
• Is Part Of: International journal of organizational analysis. Volume 24:Issue 3(2016)
• Publication Date: 2016-07-11
• Subjects: Management -- Periodicals; Organization -- Periodicals; Electronic journals; 658
• DOI: 10.1108/IJOA-02-2014-0739
• Languages: English
• ISSNs: 1934-8835

Abstract

Abstract : Purpose: The purpose of this paper is two-fold: first, to investigate the effect of top management team (TMT) tenure diversity and firm financial performance (ROE, ROA); and second, to examine the moderating effect of TMT average age between TMT tenure diversity and firm performance. Design/methodology/approach: The paper presented results from a quantitative study of 744 TMTs in Japanese manufacturing firms. The multiple hierarchical regression analysis was used to test the hypotheses. Findings: Our results show that TMT tenure diversity had a negative and significant main effect on ROE, but not ROA. Furthermore, our results also indicate that the negative relationship between TMT tenure diversity and firm performance was attenuated by having older TMTs. Originality/value: First, this paper expands scope of research on TMT diversity, which has hitherto primarily on non-individualistic variables (such as industry setting), by examining the moderating role of an individualistic variable (TMT average age). Second, this paper extended the attempts to apply the age-related theory by considering the role from the viewpoint of group level, namely TMT average age.